Text Size

-

+

reset

Or if they enroll in a smoking-cessation program.

Insurers can’t toss someone off the health plan in the individual market if they turn out to be a secret smoker. But they can levy the hefty surcharge on smokers if they are discovered to have lied. But in practice, it’s hard to tell who’s a smoker, which in this case is defined as someone who has smoked at least four times a week for the past six months.

“Ultimately, the determination of whether or not a person is a smoker … is up to the honor of that individual,” said Tom Harte, president-elect of the National Association of Health Underwriters. “That is a real threat to the validity of the tobacco rating.”

On the small group market — which mostly serves small businesses — health insurers can charge smokers more only if they also have access to a program to help them quit. And if they take part in the cessation program, they can get their insurance premium cut in half. That, in theory, would cancel out the surcharge, although all the details are not yet clear, said Steve Finan, director of policy for the American Cancer Society Cancer Action Network.

A host of issues remain unresolved. Does a smoker have to actually quit or just signal an intent to enroll? Does the discount kick in with enrollment or only after the program is completed?

“There’s a lot of money at stake, and this has the potential to become a very contentious, and maybe litigious, issue,” Finan said.

These rules will apply both in and out of the new insurance exchanges — but many people are expected to shift into the exchanges, particularly if they qualify for the subsidies available only in the exchange plans.

And the tobacco surcharge applies to the whole cost of insurance — not the amount people pay after their subsidies kick in. That can add up.

An analysis by the Institute for Health Policy Solutions found that an older single adult earning 150 percent of the poverty level who was paying $708 a year as a nonsmoker would be charged more than $5,900 with the smoking surcharge — which may make insurance unaffordable.

That’s why a wide array of anti-smoking groups have argued against the policy. The American Cancer Society, the American Heart Association, the American Lung Association and others say that research has not shown that higher insurance premiums decrease smoking — but they will almost certainly mean fewer smokers receive health coverage.

“Smokers almost always need some kind of medical assistance to quit, and at the same time you need that you can no longer afford medical insurance,” Finan said. “It could defeat one of the major purposes of the Affordable Care Act.”

The ACA makes insurers scrap many of the ways they used to set prices. They can’t charge women more than men, for instance or make people with pre-existing conditions pay more. In the new market, only four pricing factors remain: age, geography, family makeup and smoking status.

A few states already forbid a tobacco surcharge, and they are free to continue doing so or set it at lower than 50 percent.

Insurers are hoping for some tweaks and more clarity before the policies are finalized.

“The proposed regulation appears to link the use of tobacco as a rating factor to an individual’s ‘participation’ in a cessation program,” America’s Health Insurance Plans wrote in comments to Health and Human Services’ proposed rule last November. “We suggest that linking the tobacco use surcharge to the ‘successful completion’ of such a program is the more appropriate standard to prevent gaming and potential abuses.”

The underwriters association also had concerns about how smokers could game the system without quitting smoking. They want the discounts to go to people who actually quit.

HHS did not say in a final market rule released last month and is still working to finalize the wellness rules.